May’s Financial To-Dos

Based on Morningstar’s Financial To-Do List, we’re offering a few tasks each month for tackling what can seem like an overwhelming task: getting or keeping your financial house in order.

A seemingly impossible battle can be won by focusing on just a few items at a time. Choose one or more of the following things to accomplish this month.

Consider college funding plans

May 29th is “529 Day,” named for a 529 Plan, one type of account many parents and grandparents use to save for college. If you have children or grandchildren (or aspirations to go back to school yourself!), now is the perfect time to review your funding plan.

The first step for most is discussing funding expectations with a spouse. Do you plan on paying for Junior’s entire college career? Will your student take on debt — and if not, will you? Spouses’ assumptions are often very different and often connected to their own college experiences.

Expectations are one thing; having a plan is another. If you are saving and investing for future education needs, are your balances on track or do you need to bump up contributions? If you have another plan to pay for school, such as the sale of an asset or from cash flow itself, how on track is this plan? May is a great time to take action.

Review your credit report

You should regularly review your credit report, and a free annual copy from each of the three major credit bureaus means three free copies each year. Accessing a report is easy via www.annualcreditreport.com. If married, you should pull the report for both spouses.

Once you pull the report, review the accounts listed to make sure nothing fraudulent has been opened in your names. You should also check for transaction errors (such as incorrectly labeled late payments) on your current accounts, since these occasionally occur.

Evaluate your emergency fund

Being unprepared for a financial emergency is one of the most common money mistakes. As the year has progressed, you may have tapped into your cash reserves for unexpected expenses. If so, no problem — that’s what your emergency fund is for, after all. But now is a great time to assess whether or not you need to beef up your savings again, and to build a plan for replenishing if so.

If you need help deciding how much to keep in your savings account (or where to keep it), check out our post: “Where to park your Emergency Fund.”

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